# How much does a cigar cost to produce?



## erictheobscure (Feb 15, 2007)

Perhaps somebody with a deeper knowledge of the industry could answer this question. It seems almost impossible to estimate without some special knowledge, since there are so many elements involved (farming, harvesting, aging, rolling, storing, shipping, etc.).

But I ask because whenever I feel like I've gotten a bargain on some smokes, I start wondering if I'm really a dupe because they're actually incredibly cheap to mass produce. Or, to put it a different way, I'm curious as to what percentage of a cigar's price goes toward advertising, profits, etc.


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## KASR (Aug 2, 2006)

When you think of all the work put into the grpwing process, the aging, the blend testing, the actualy blending, the rollers, inspectors, etc.....we're undoubtedly getting a helluva deal and most certainly capitalizing on those third world country's unpaid workforce. That's just my .02 tho.


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## Addiction (May 8, 2007)

Yeah if you read about how they make them it seems there are maybe a 100 steps to the whole process from seed to torch that are done by hand. Its really dependant on the labor laws of the country they are produced in. However as there are many bundle cigars for around $1 a stick I'd have to guesstiamte it costs them maybe $.50 to get that cigar on the shelf in front of you. That leaves some for the B&M and some for the producers.


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## jdean33442 (May 8, 2007)

I agree with KASR, Cigars are profitable because of the third world nations producing them.

It's only the guys at the very top making money.

You also have to understand that the resellers mark up the prices so they can make some cash. I would think that a 10 dollar stick retail costs $2-$2.50 at cost.



KASR said:


> When you think of all the work put into the grpwing process, the aging, the blend testing, the actualy blending, the rollers, inspectors, etc.....we're undoubtedly getting a helluva deal and most certainly capitalizing on those third world country's unpaid workforce. That's just my .02 tho.


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## kheffelf (Jul 31, 2006)

jdean33442 said:


> I agree with KASR, Cigars are profitable because of the third world nations producing them.
> 
> It's only the guys at the very top making money.
> 
> You also have to understand that the resellers mark up the prices so they can make some cash. I would think that a *10 dollar stick retail costs $2-$2.50 at cost.*


It is also going to depend on the retailer and how many cigars they buy from the vendor, the more they buy the cheaper they got, from my knowledge most smaller b and m's pay a little more for their cigars. They are making definitely making money on their cigars but not as much as that.


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## carni (Jan 18, 2007)

kinda sucks when you think about. the fuentes and padrons live very well when their workers make diddly squat. such is capitalism though, rather not be communist.

if i had to guess the avg. hand made cigar cost coming out of the factory packaged and ready to smoke...$1. Factory sells it to retailers for $3. Reatilers sell it to us for $6.

Huge profit margins in the cigar biz but also huge start up cost and overhead.


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## Silound (May 22, 2007)

I would imagine that the cigar companies decide on an approximate price they want the cigar to sell for, and decide how much to charge the stores or suppliers from there.

Also remember that any extra middle people in the pipeline increases the cost of the cigars by another markup.


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## montecristo#2 (May 29, 2006)

I have actually wondered this myself.

Sometimes when I flip through a Holt's catalog, I wonder how they can sell bundles of *hand-made* cigars for less than 50 cents a piece. I know the tobacco is not as good, but they are still made by hand. Are they paying 25 cents a piece to make a 25 cent profit? They have to be making some sort of a profit, otherwise, why would they waste the time (to store and advertise them) and the catalog space.

So I actually asked an Ashton sales rep this question one day, because I really wanted to know. He said for some of the bargain stuff, they find small cigar producers in the caribbean who have tons of extra cigars they made many years back and cannot sell. So they basically offer them rock bottom prices to take the whole lot and the producers say sure since they no longer want to store them and couldn't sell them anyway. Some of them could have even been produced during the boom and could have some considerable age on them.

Is this true, I have no clue, that is just what the sales rep told me. Maybe all the cheap smokes are just factory seconds or similar to the tampasweethearts (rolled by beginners).

I think it is probably cheaper to grow tobacco than we think. I know one plant produces 14-16 leaves, but those leaves are pretty big. Does anyone know how many cigars you can make from one plant? Then the curing process seems to be more time dependent than labor intensive. I would think most of the cost of a cigar would be rolling, since it is done by hand.

But, maybe this is not the case either, as cigars produced in the US (let's say by manufacturers in Miami) should cost considerably more (assuming the pay scale is actually regulated), but they really don't. It is true most of them are expensive or premium, but they are probably two-fold more, not 10-20 fold more.

Then of course you get into the differences between our economy and the islands where the cigars are rolled. For some places, the pay is probably pretty good as well as the working conditions, other places maybe it is not. That is hard to judge unless you examine specific situations. The Fuentes do great things in the DR.

I guess you could look at Tatuajes as an example, the Miami-made Tatuajes run roughly 8-13 dollars, while the Nicaraguan-made Havana VI run 5.50 - 8 dollars. Is this because of cheaper labor or because they wanted to produce a medium-priced range cigar? Or are these two factors actually linked? Maybe it is neither and they just needed another factory to make the cigars and they wanted it to be closer to the tobacco source.

The Miami factory does produce lower priced Don Pepin Garcia brand cigars (so maybe it is not labor), but then maybe the tobacco is not as good as the stuff they use in the Tatuajes or Padilla Miami's.

I guess there are a lot of factors that go into making and pricing a cigar. I have not really looked into the aspects of producing cigars, this is just some of the stuff I have thought about while flipping through catalogs when I am not :dr. Please don't take any of this as fact or anything else, I was just putting my thought done on "paper."

It is still pretty amazing to me that cigars are not more expensive and that someone like the Fuentes can produce 30+ million hand-made cigars a year.


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## inept (Jun 22, 2006)

I've always preferred to think of this in terms of the packaging. When you can buy a box of very nice cigars for 60-80 bucks and they come in a beautiful cedar box with mahogany veneer or a charming cedar box with a lacquered finish attractive enough to make a jewelery box, then you've gotta figure that the cigars inside the box are worth next to nothing. Heck, I've seen cheap, nasty cigars that came in very nice boxes so I sometimes wonder whether the packaging is worth more than the cigar.


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## jdean33442 (May 8, 2007)

$2 cost isn't what the retailers are paying though. He asked how much to produce a cigar.

It's a rough estimation based off of the B&M price sheets that i've seen provided by the cigar manufacturers.



kheffelf said:


> It is also going to depend on the retailer and how many cigars they buy from the vendor, the more they buy the cheaper they got, from my knowledge most smaller b and m's pay a little more for their cigars. They are making definitely making money on their cigars but not as much as that.


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## jdean33442 (May 8, 2007)

*COUGH* Gurhka *COUGH*





inept said:


> I've always preferred to think of this in terms of the packaging. When you can buy a box of very nice cigars for 60-80 bucks and they come in a beautiful cedar box with mahogany veneer or a charming cedar box with a lacquered finish attractive enough to make a jewelery box, then you've gotta figure that the cigars inside the box are worth next to nothing. Heck, I've seen cheap, nasty cigars that came in very nice boxes so I sometimes wonder whether the packaging is worth more than the cigar.


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## jdean33442 (May 8, 2007)

carni said:


> kinda sucks when you think about. the fuentes and padrons live very well when their workers make diddly squat.


ever worked for a corporation ?


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## kheffelf (Jul 31, 2006)

jdean33442 said:


> $2 cost isn't what the retailers are paying though. He asked how much to produce a cigar.
> 
> It's a rough estimation based off of the B&M price sheets that i've seen provided by the cigar manufacturers.


I know what he was asking, but I misunderstood your post, no worries.


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## berk-m (Aug 20, 2006)

jdean33442 said:


> ever worked for a corporation ?


:r

I can't remember where I read or heard this but the Fuentes pay the good rollers more then the top executives in the company. It sounded like the rollers have done this all of their lives and some can't read or write but make pretty big money. They have to have non-compete contracts because other factories will try and pay them more to steal them away. Don't take this as fact but I'm sure I read an article about this somewhere. I have also wondered about this cost and it seems pretty amazing - the only incite I have is that I've talked to a rep or 2 and they all say that the mark up isn't very much at all.


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## carni (Jan 18, 2007)

jdean33442 said:


> *COUGH* Gurhka *COUGH*


cough, cao, cough:ss


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## gvarsity (Dec 12, 2006)

berk-m said:


> :r
> 
> I can't remember where I read or heard this but the Fuentes pay the good rollers more then the top executives in the company. It sounded like the rollers have done this all of their lives and some can't read or write but make pretty big money. They have to have non-compete contracts because other factories will try and pay them more to steal them away. Don't take this as fact but I'm sure I read an article about this somewhere. I have also wondered about this cost and it seems pretty amazing - the only incite I have is that I've talked to a rep or 2 and they all say that the mark up isn't very much at all.


From what I understand cigars actually have a fairly thin profit margin. The money is made like many things in economies of scale essentially volume. I'm guessing the profit margin to someone like cigars international is less than 10% and probably less than 5% of what they charge retail.

The manufacturers probably have even a smaller profit margin per unit 2-3%. For 100$ 20 cigar box that would be 15 cents a cigar or 3$ a box to the manufacturer in profit. Still 100,000 boxes is 300,000$ in profit after all expenses including executive salaries etc... You start multiplying that accross multiple sizes and lines and you get to a lot of cigars and a lot of profit.

Premium brands have can demand a higher margin because of the demand name recognition marketing. A bundle cigar has a razor thin margin but a Opus X probably has a much higher margin. I remember reading that Padron 1926 & 1964 are less than 10% of Padron cigars made but bring in about half the profit.


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## Hoodere (Apr 8, 2007)

I would wager that no manufacturer has more than $1.00,evan in the super premies, invested in tobacco and labor in a handmade cigar. With packaging, advertising, numerous profit points and tax assesments between the manufacturer and the consumer we are getting a helluva good deal.
As economic conditions continue to improve in cigar producing countries we will have more and more machine made cigars Evan the Cubans are adding more machine made cigars to their product lines.:ss


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## screwbag (Apr 21, 2007)

I have often wondered the same things about production cost and also about markup on the retail end....

I know Hardware stores markup some things 500%+ so i wonder if B&M markup os like 50% or what...


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